In­fla­tion to go up slightly

IN­FLA­TION is pro­jected to in­crease to 1,1 per­cent next year due to the an­tic­i­pated in­crease in en­ergy prices amid ex­pec­ta­tions that it will close this year at 0, 4 per­cent.

In its 2017 Pre-Bud­get Strat­egy Pa­per, Trea­sury said in­fla­tion will end this year at be­low zero per­cent due to a strong United States dol­lar.

“In terms of prices, per­sis­tence of de­fla­tion­ary con­di­tions is ex­pected to year-end, with an­nual av­er­age in­fla­tion pro­jected at around -0.4 per­cent in 2016, sus­tained by a strong US dol­lar and lim­ited ag­gre­gate de­mand. How­ever, in 2017, in­fla­tion is pro­jected to slightly in­crease to 1,1 per­cent, ow­ing to an­tic­i­pated in­crease in en­ergy prices, as well as pro­jected grad­ual re­bound in ag­gre­gate de­mand,” said Trea­sury in its pre-bud­get pa­per.

Trea­sury also said eco­nomic growth for 2016 is pro­jected at 1, 2 per­cent, down from the orig­i­nal pro­jec­tion of 2, 7 per­cent.

Trea­sury said the 2017 growth pro­jec­tion is an­chored on the fol­low­ing as­sump­tions: nor­mal to above nor­mal rain­fall pat­tern sup­port­ing a favourable agri­cul­tural sea­son; im­proved agri­cul­tural fi­nanc­ing; in­cen­tives for ex­porters; mod­er­ate im­prove­ment in in­ter­na­tional com­mod­ity prices as well as an im­proved in­vest­ment en­vi­ron­ment ben­e­fit­ing from the on­go­ing Ease of Do­ing Busi­ness Re­forms.

Also seen as con­tribut­ing to the growth was the suc­cess­ful re-en­gage­ment with In­ter­na­tional Fi­nan­cial In­sti­tu­tions (IFIs) and pos­i­tive gains from the var­i­ous fa­cil­i­ties for the pro­duc­tive sec­tors sup­ported by im­ple­men­ta­tion of SI 64 of 2016, which seeks to pro­vide an even play­ing field for in­dus­tries from un­fair com­pe­ti­tion posed by some im­ports.